If anyone is still having any doubts about the financial success of AB InBev’s (BUD) $52 billion hostile takeover of Anheuser-Busch nearly six years ago, they should take a look at yesterday’s acquisition. The Belgian-based company said it would spend $5.8 billion to reacquire Oriental Brewery, the leading South Korean beer manufacturer. AB InBev sold the Asian beermaker in 2009 to KKR for $1.8 billion.
You may have noticed that the world’s largest brewer is paying three times more than the 2009 selling price for Oriental. Is that a bad price? Not really. The company borrowed $54 billion to finance the Anheuser-Busch acquisition and had to take measures to reduce its debt, such as retrieving BlackBerries from many of its new American employees and requiring them fly commercial. And that was only the beginning.
Back in 2012 Bloomberg Businessweek reported that AB InBev was alienating some of its American customers by brewing Beck’s in the U.S. rather than Germany and using cheaper hops in Budweiser and other domestic beers. AB InBev strongly denied that it was using lesser-quality hops or doing anything to compromise the quality of its beers.
Either way, AB InBev emerged stronger than ever financially. Last year it bought the rest of Grupo Modelo that it didn’t already own for $20 billion, and now it’s tightening its grip in Asia. Among other things, the Oriental deal gives AB InBev yet another way to promote its leading American brands abroad; Budweiser and Bud Light have been losing market share at home.
Financial analysts seemed pleased with the Oriental acquisition. Fitch Ratings affirmed AB InBev’s A bond rating on Tuesday. Now the megabrewer needs to make American beer drinkers just as happy.